Renewed call for stamp duty surcharge to be scrapped
Stamp duty is constraining the housing industry and a reversal of the 3% surcharge would provide a significant boost to housing transactions in England and Wales, a new report has indicated.
With stamp duty costs putting many people off purchasing new homes, there has been additional strain imparted on the buy-to-let market, with more people looking to rent properties as they perceive themselves to be priced out of buying their own property.
On April 1 2016, the government introduced higher stamp duty rates for people purchasing additional residential properties. This includes most investment properties and second homes.
Stamp duty can add thousands of pounds to house purchases, with London and the South East particularly expensive – and the 3% surcharge on second homes, which was introduced in 2016, has undoubtedly impacted on the number of transactions taking place.
New data from the London School of Economics and the VATT Institute for Economic Research, indicated that moving levels would grow by in excess of 25% if stamp duty was abolished.
Professor Christian Hilber, co-author of the report, commented:
“The key message is that stamp duty hampers mobility significantly, it create a mismatch and distortions in the housing market. Our analysis suggests that mobility would be 27% higher if stamp duty was abolished or replaced with an annual tax on the value of property.”
Andrew Turner, chief executive at Commercial Trust, said:
“The introduction of the 3% stamp duty surcharge in April 2016 has without doubt not only slowed the market but given many existing and would-be buy-to-let landlords cause for concern, as this charge can make a significant difference to their finances.
“At a time when there is a housing crisis, any decision that can give impetus to the house buying market can only have a positive impact. The stamp duty surcharge is constricting the industry and buy-to-let will benefit enormously from any change in the present rules, encouraging more transactions and more private landlords and that in turn can only be good news for those looking to rent.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.